We talk with a lot of accountants and one of the most common issues they face in business is attracting talent, good people to do the job.
An ESOP is perfect for an accounting firm because it allows for anyone in the business to be an owner in the business and for some of the old firms out there it helps them transition value to a new generation.
Now, here is something which challenges the thinking of nearly every accounting firm I talk to; plan your equity ESOP allocation to somewhere between 60% and 80%. In other words, provide for a scenario where staff are able to participate in up to 80% (even more) of the equity in the business.
We can model how this makes sense, yet it is kind of contrary to traditional ways of thinking about equity in an accounting firm.
The best thing about this approach is the staff are so on board with it and go the extra mile to make the firm grow. In the end the 20% piece of the firm pie the older owner still has is sometimes bigger than 100% of the pie.
This same sort of approach helps anyone in a professional services type business and even extends to trades. A brick laying company which fast tracked equity and issued more dividends to employees saw an uptick in revenue and profit 3x what they were doing 1 year after the ESOP went live.
If you are finding it difficult to get good people into the business, have a chat to us about how an ESOP might just solve the problem.